Wednesday, September 7, 2011

JC Trading Group were very nice and helpful in their responses to my queries. Unlike several of the other firms I researched, they don't require Series 7 licensing, but they do require the U4 background check. This is because they are a CBSX broker/dealer. They are primarily interested in big ticket orders and as many fills as possible. They profit primarily from execution costs. That being said, their rates are reasonable comparative to the industry (.0045/.0055 per share for Lightspeed platform), and will fluctuate based on your volume and, Like Echo, their customer service was far better than Bright's. They do have two divisions within their firm. A pro-trading division and a non-pro one. The pro-division requires 6 months of profitable track record where the non-pro division doesn't require that. Their traders use Laser, Sterling Pro Trader and Lightspeed, depending how much you are willing to pay for data on your platform. They do offer remote trading. They do have full ECN rebate pass-through, which for high-frequency traders is a good thing. It does require a minimum of $5000 deposit, which will give you $100,000 buying power for day trades. From chatting with several of their traders, it seems that most people are happy with them and their services. It seems that withdrawing profits is quick and painless and some level of support is available. Everyone did warn that it's not the best place for newbies as there is not much in place to assist with a learning curve, and trying to learn this profession on the fly is a very bumpy ride typically. Depending on your situation, you will get all or most of the profit splits. Part of it depends on your track record and how much of the firm's capital you are using.

Conclusion: In dealing with JC Trading and some of their traders, the response was for the most part very positive. In a similar fashion to Echo, they are a true-blue prop firm that wants their traders to make money, but their primary focus is on generating tickets and high volume of shares traded. Their technology, costs and their business operations seems to be among the more superior in their peer group. They do allow for more inexperienced traders to join them, but it becomes quite a bit more cost-prohibitive. I do feel like they are limited in the fact that they really only trade stock, but part of this is my own personal desires. I like to have some training and community available and I want to be able to trade all asset classes. Still, within their niche, I think they seem like a good choice. I give them a rating of 4 out of 5 stars.

Tuesday, August 30, 2011

Of all the things I've heard and read about prop trading, Maverick Trading seems to be very unique in their approach to the industry. They don't scalp or even day-trade other than a little bit with futures and Forex. Their primary focus is on spread trading equity options. When I first started this process, I was really looking for a place to trade equities but at a slower pace than most firms desire. However, as I watched their introductory video, I became more intrigued with their methodology. A lot of what they said made a lot of sense to me. They echoed my sentiments that the markets are no place for hobbyists. They focus on safety through disciplined risk management and position-sizing. They allow for trading in all asset classes. After talking to one of their recruiters on the phone for about 30 minutes, I had the rest of my questions answered. Here is what I found: they don't take a piece of commissions. They benefit from profit splits. They do have a $5000 lifetime membership fee to enroll which grants you access to all of their training (I couldn't find a single bad review about their curriculum or instructors anywhere) and it also includes one-on-one coaching (3 ninety-minute sessions that can be used at any time necessary from one of the senior traders) and access to their trading rooms and live interactive chats. They do have desk fees of $199/month, but they pass through their rates on commissions and rebates ($0.005/share and $0.50/options contract due to the lack of high-frequency). Their training isn't mandatory, per se, but each trader needs to pass proficiency exams which are covered in the classes. All trading and training is done remotely. Their office is based in Salt Lake City, but 95 percent of their traders trade remotely. I spoke with a few of their traders and they said that the community aspect was the best part of trading there. Between chats, emails and phone conversations, the firm is completely interactive. They give out live trades that their traders are welcome to trade them also. They do not require a Series 7 or any licensing, for that matter. They pay out, similarly to the other firms, with a K-1 for tax purposes. To trade with firm capital, traders need to pass the exams and show proficiency in a demo account (1-2 months worth). Then they need to contribute a $5000 risk deposit which is completely refundable immediately when the trader leaves. The firm puts $20,000 behind that money so that beginning traders have $25,000 to work with plus the portfolio margin which is roughly 5.6 to 1 for overnight positions, so about $125,000 in buying power to start and then moves up incrementally as the trader books profits consistently. To go along with this, the trader starts off keeping 70 percent of the profits, and then moving up to 75 and finally 80 percent for the senior traders. The trader is never required to bring additional capital in to feed their accounts as they grow. The firm adds all of the additional funds. Basically, they reward their high-flyers. They do not lock up your capital for any period of time.

Conclusion: Maverick Trading is unique in its approach to this industry. One of the concerns I have is that they seem to be much smaller than a lot of the firms I looked into. They have a recruitment process and only bring on certain traders. You have to fill out an application and speak with their recruiters. They also stink if you are looking for high-frequency trading. They don't support it or recommend it in any way. In fact, they actively ward against it due to the horrible success rate of that style of trading. Everyone I spoke with was very helpful and informative. I kind of played dumb to see if they knew what they were talking about trading-wise, and I was very impressed. Definitely knowledgeable. They aren't completely polished, but something about their sincerity struck me. I guess I would sum it up as Maverick is probably a great place to get your beak wet and really learn trading with the ability to trade decent amounts of capital for those that don't already have sizable accounts. If you have 10-15 grand to trade with, and you aren't looking to scalp or day trade only, this seems like it would be a great place to plant yourself. For people that are broke or have huge accounts already, it probably isn't for you. I was impressed. I may join someday soon. 4.5 stars out of 5. Thanks for the info Jeff (recruiter).

I won't spend much time on this. When I first looked into it, I thought Affinity was a prop firm. As I looked into it more, it is simply an education group that focuses on teaching scalping and high-frequency tactics. The website is incredibly professional and the work they've put in to make themselves look good online is clear. I can't testify to whether the education is sound or not, but if you are a trader that is looking to trade prop with one of the firms that doesn't offer their own training, it may be worth your time to investigate Affinity further. Check on Elite Trader and Trade2Win for more information. I decided not to spend any more time looking into it since it didn't meet my criteria. Of the firms I've looked into so far, Echo doesn't have training, Bright has training that gets mixed reviews, and Maverick has training that seems to be fantastic but doesn't encompass high-frequency; just equities, options, futures and Forex on a lower-frequency level.

Monday, August 29, 2011

Over the last few years, ECHOtrade has always been one of the names that has come up in conversations about prop trading, along with Bright and Maverick Trading. Similar to Bright Trading, they have both remote trading and in-office access available in specific locations. Another similarity is that they require all traders to carry a Series 7 unless you've had twelve consecutive years in good standing on an exchange. They also offer automated trading, although from everything I've ever seen or heard, black-box trading will inevitably implode and the traders always end up busted. While it's important to have great and reliable tools, any trader that is going to fully rely on a software to make them money is a fool that will soon be parted with their money, in my opinion. Echo is really not designed for beginning traders, as they don't offer any formal training. The way their trade costs are structured, traders really need to "hit the ground running" and it was suggested to me by one of their representatives that it would be very difficult to make profits without trading at least 20,000 shares daily. I really appreciated this information, as they were neither trying to sell me into something that I wasn't interested in, and they made it clear that they were a high-frequency equities firm (unlike Maverick Trading which I will review next). For me personally, I wasn't really interested in this type of trading, but I continued to ask questions in order to pass on the information here. The customer support is great, but there really isn't much of a community unless you are in one of the physical locations in NYC, Chicago, Phoenix and Boca Raton, FL. They use a number of different software programs which are obviously all directed toward high-frequency trading and will come at a cost of a couple hundred dollars per month to use them, depending which tools you use. The commissions and are competitive with most of the high-frequency prop-firms ($0.004 per share) and there is no profit split. The trader keeps 100%, but they also don't back you with firm capital, only margin. They do have desk fees between $250-$400 depending on the frequency and size of your trades. There is a minimum risk deposit required of $10,000.

Conclusion: Echo is a highly-reputable firm that is great for anyone looking to use technology to maximize their high-frequency trading. They are a well-organized machine. The reviews from traders are mostly positive. They specifically generate profits from traders' executions, so they want as much trading as possible out of each trader. The pros are that you get to be with a good firm and enjoy top-tier technology for your trades. The cons are that you are a small fish in a big pond and you have to have a Series 7 and limit yourself to high-frequency trading. I will say that I was impressed overall, and if I were looking to be a high-frequency trader, I would very likely go with Echo. I give them 4.5 out of 5 stars.

Tuesday, August 23, 2011

Bright Trading was the first firm I looked into. They are a really big firm and have a known reputation in the industry. It is headed by Bob and Don Bright who have some very established track records. Their website is one of the worst I've ever seen. It's www.stocktrading.com. It's very amateurish and there is almost no information about the actual process. I watched some of the videos which seemed scattered and lacking, but I guess that's neither here nor there. It just seems like it should be redone. I don't expect them to give away free trading tactics, but it would be nice for information about joining the firm to be clearly displayed. Anyway, I called them and got a little more information. The process to become a trader requires you to travel to Vegas for a 3-day orientation class that costs $1250.00. This is a prerequisite for their 2 week Boot Camp class which is offered online and costs $3000.00. In order to take the Boot Camp, you must also join the firm and carry a Series 7 license. The sentiment I get from their members and former members is that the training isn't great, so it could be tough for newer traders to "get over the hump". The firm's focus is on high-frequency equities and pairs trading. The desk fees are $400/month and there is a minimum of 12 months required. They have both brick-and-mortar offices across the U.S. and in Vancouver, B.C., and they also have remote trading available. They use RediPlus and OmniPro softwares. I don't care for RediPlus, as it's a bit dated, but I've never used OmniPro. I couldn't get any exact information as to the amount of risk capital that traders need to bring in, but from the reviews I've read, they are very good about getting people's money back to them quickly when they quit. They do seem to have a decent community with teams and mentors dedicated for each trader. The feedback is mixed on this, but I do know from experience that trading with a group is far superior to trading alone.

Conclusion: Bright seems like a good place to trade if you are an experienced day trader or pick up on things easily. The start-up costs are reasonable for this industry, but the training may lack a bit. They are well-established and are headed by some outstanding traders. They do require licensing, which seems unnecessary based on what traders do and what the Series 7 is designed for, but I'm sure it keeps everyone protected. I give Bright Trading 3.5 out of 5 stars. (Get a new website. It's cheap and easy.)

Monday, August 22, 2011

Hey everyone, my name is Jay Widdison and I'm a trader. Recently, I was looking into joining a proprietary trading firm that I would be able to trade with from home. Through my due diligence, I realized that getting all of the information about these firms was much more difficult that I had thought. Therefore, after researching several of them, I decided to start this blog so that anyone looking into prop firms would be able to come here and have all the information in one place. Let me start by introducing proprietary trading to anyone that isn't familiar. A prop firm is one which employs traders to trade directly into the markets to generate profits rather than to seek general investors and collect fees and percentages like that of a mutual fund or hedge fund. Prop firms will generally provide tools, training and data (at a cost). The firm will also provide the trader the ability to trade with the firm's capital, although most of them require the trader to come in with some risk capital of their own. They will also share in a traders' profits (typically ranging from 20-50 percent). Often, a firm will also profit from execution costs, so that each time a trader gets in and out of a trade, the firm will get a percentage of the spread. Over the next several posts, I will, in as much depth as possible, answer the following about each firm that I have researched and then I will continue to add posts as I research new firms:

1) How much start-up capital is a trader required to bring in?
2) How much are the desk fees and additional data and monthly costs?
3) Is training available or necessary and if so, what are the costs and time frame involved?
4) What kind of support does the firm offer? (coaching, live classes, email support, chat rooms, etc.)
5) Are there any licenses or certificates required? (Series 7 or 63, etc.)
6) Is there remote trading, in-house trading or both available?
7) What asset classes are utilized? (stocks, options, futures, forex, etc.)
8) What kind of trade frequency is required or focused upon? (scalping, day positions, swing, etc.)
9) What is the commission structure and how does the firm benefit from trade execution?
10) What are the profit splits and the time-frames for advancement in profit splits?
11) Is there a "lock-up" period for the traders' capital where they aren't able to access it or withdraw for a set period of time?
12) Is there a trading community where information and ideas can be freely exchanged and accessed?

Based on the results of this information, I will rank each firm with a basic "out-of-5-stars" rating system. The goal of this blog is to simply disseminate information more effectively, and to wade through a lot of the muck that you run into when digging for this knowledge. So far I have researched 6 firms and still waiting to hear from a couple more. These firms include: Bright Trading, Maverick Trading, SMB Trading, JC Trading, Affinity Trading, and Echo Trading. I'm waiting to hear from Cy Trading Group and Title Trading. Look for each firm to receive their own post dedicated to the above information. Thanks for taking the time to read.